WaPo Earnings Up 256%, But Its Kaplan Cash Cow Is in Danger

The Washington Post Co. reported third quarter earnings of $60.9 million on Friday, up from $17.1 million last year for a whopping 256 percent earnings increase, but there’s trouble on the horizon at the company’s cash cow, Kaplan Inc.

Much of WaPo’s revenue comes from Kaplan’s online college and tutoring business, which had revenues of $743.3 million this quarter. Kaplan is facing new government regulations in response to concerns that the company has been misleading students about their post-graduation employment prospects.

In response to the regulations, Kaplan is implementing a new program called “Kaplan Commitment” that will allow potential students to have a four-to-five week free trial before paying. The company estimates that it would have earned about $100 million less in the first three months of this year had the program already been effect. If Kaplan’s estimates are correct, The Washington Post Co.’s days of earnings increases will soon be over.

WaPo’s good news included revenue increases in the paper’s newspaper division and the publishing division, which improved thanks to the sale of Newsweek. In contrast, The New York Times company earned $554.3 million this quarter, down 2.7 percent from last year.